TEE COLONIAL BANK.

New Zealand Herald, Volume XLII, Issue 12955, 26 August 1905, Page 6

TEE COLONIAL BANK.

SHAREHOLDERS ASK FOR AN r INVESTIGATION.

DISCUSSION IN PARLIAMENT.

fBV TELEGBAPH.— PRESS ASSOCIATION.]

Wellington, Friday. In the House of Representatives this afternoon the Public Petitions Committee recommended that the investigation asked for by the Colonial Bank shareholders, concerning the loss of £555,000 of the shareholders' capital, be made. On the motion. "That the report of the committee be referred to the Government for favourable consideration," Mr. Herdman pointed out that, according to its last, balancesheet, the Colonial Bank's funds amounted to £465,000 when liquidation was undertaken. The liquidation yielded only £110,000 to the shareholders. Where, he asked had the balance of the money gone to.' liiey l-ati , ri-dit to assume one of two things, oitner thaUhe balance-sheet which was published by the directors of the Colonial Bank pnoi to liquidation was untrue and misleading and a complete misrepresentation, or that he liquidators in winding up the institution had been piiltv of gross and culpable, negligence. He contended that, in the interests of public morality, it was clearly the duty of the Government to institute a searching inquiry into the v hole mat tor. . . Mr Petition said Mr. Herdman ought to have stated what occurred between the Colonial Hank and the Bank of New /.calami, ~„.! that would have shown the House how the £400,000 disappeared. He did not hesihtc to say thai a good deal of the capital of the Colonial Bank disappeared in that arrangement, widen favoured the Bank of Mew Zealand, and was a serious loss to the Colonial Hank shareholders. He went further, and said that if in respect to a large, unmoor of fir' accounts the directors of the Bank of New Zealand had been dealing with their own canital, they would have dealt with it verv diiferontiv. They wore liberal in the extreme in dealing with some of those account-. He thought he was right in saying tint* had the Colonial Lank not made the agreement it did with the Bank of New Zealand, and tarried on its own business there would have boon no necessity for the investigation asked for, and tins great loss of canital would not have, taken place. Trie Government, would look carefully into the* whole matter, but after the steps that had been taken what, he asked, could the. Government do': The Court had dissolved thebank, and the only thing left was the records, whim could not resuscitate the bank, and the Government was powerless. It would be a v.::-. of time to go through the, accounts unless thev had something tangible to go upon. So far the, shareholders had not slnwu stood "round- for an inquiry. In bis opinion. the Court had done its duty faithfully, and he believed the capital disappeared when the ntrreemeni was made between'the think of" New Zealand and the Colonial Bank. If any further representations were made they would be considered by the Government, but, seeing that the subject had been dealt with by the Supreme. Court, he did not think there was any need for inquiry. Mr. Taylor pointed out that in a few weeks the book's of the Colonial Bank would bo destroyed, and every chance of solving tho disappearance of the money would have gone. It was quite conceivable that if the truth could be elicited, the shareholders would have an action against somebody, and perhaps have, some of the money restored to thorn. , . Mr Wilford said what they wanted to know was whether the £355,009 had been lost by the directors or by the liquidators. Mr. Duthie moved to add to the report, "That meanwhile the House desires the Government to take steps to prevent the destruction of the Colonial Bank's books and papers, with a view to having a thorough investigation and inquiry into the liquidation of the bank before November 1 next." Mr. S&ddon said he objected to the Government being asked to prevent the destruction of the books and papers without any evidence being given. After the Supreme Court had ordered the destruction of them, the House should hesitate before it passed a reso'ution of that sort, and should only do so if it was shown that some reason existed for upsetting the decision of the Supreme Court. Mr. Seddon added that he regarded the amendment as a deliberate attempt to put the Government in a false position. Several other members took part in 'he discussion, which was interrupted by the half-past five adjournment. When the Council met at half-past two p.m., Mr. Jenkinson moved, " That the petition of W. Barron and two other shareholders and contribniories of the late Colonial Bank of New Zealand be. referred Jo the Government for their consideration, in accordance with recommendation in the report of the Public Petitions Committee" The committee, he said, had held that an inquiry into the whole history of the bank would be a. big order, but the winding up of the Co'onial Bank had roused justifiable doubts in the minds of shareholders, and the manner of winding up demanded inquiry. He did not suggest a criminal act on the part of the liquidators, but £'100,000 had been frittered away somehow, and the liquidators should justify their conduct, as the shareholders were of opinion that the bank was thoroughly solvent. Mr. Jones moved as an amendment, "That the report of the committee be referred back for further consideration." In September, 1903. the committee had been of opinion that something should be done. Next month the committee reported again that the Government should set up a committee of inquiry. Petitioners had good reason to be disgusted, as they had been thwarted on every hand. Mr. R-igg. in seojudin* the amendment, contended that the liquidation was badly managed. There was no suggestion of fraud, but the whole position was such that there was a very grave suspicion thai it was not merely want of ability that brought about the position. In the interest of commercial morality a commission was necessary.

Mr. Pinkerfon, as a me.nbor of tiie Petitions Committee, said there was a probability that in making another report, something ■very much stronger would be said. The Attorney-General said 10 years had expired since the winding up of 'lie bank. Bo did not think it reasonable '.hat the shareholders should now want Ihe colony to undertake a very expensive commission on the subject. It had been made abundantly clear by Mr. Lee Smith's evidence that the sum mentioned as having been lest by the liquidators went in overdrawn account-. It was unreasonable that the shareholders. after neglecting their opportunities, should now ask for an inquiry. Mr. Bolt supported the inquiry, on the ground that tho shareholders _ bad been placed in a very awkward position by (ho action of Parliament. Probably there had been no malfeasance, but the magnitude of the sum lost suggested something very near fraudulently. Mr. 'J'. Kelly objected to the expenditure of public money on the inquiry suggested. Mr. McLean thought that if the Bank of New Zealand were to make a present of

£100,000 to rim Colonial Bant shareholders now, it would only be doing tho right thing. As, however, the whole matter had been investigated by the Supreme Court, what was the good of doing any more, in that direction?

c. Mr. Trask opposed the setting up of an inquiry, on the ground that it would involve unnecessary expense. Mr. Jenkinson's motion was carried by 23 votes to 6.